Azerbaijan’s plan to become region's digital hub gains momentum Baku, Astana join forces to launch major Digital Silk Way initiative

The ambitious Azerbaijan-Kazakhstan Trans Caspian Fiber Optic (TCFO) project, set to lay a fiber-optic communication line (FOCL) across the Caspian Sea bed, is slated for completion by 2025. President Kassym-Jomart Tokayev of Kazakhstan disclosed this milestone during a joint session of the parliamentary chambers. The forthcoming 340-kilometre FOCL will serve as a crucial element of the expansive Digital Silk Way initiative. 

This project aims to establish a digital IP corridor linking Europe and Asia. Azerbaijan, positioning itself as a digital transit and IT nexus, is expediting the enhancement of its data storage and processing infrastructure as part of the Digital Silk Way. This includes the development of robust data centers and the provision of a range of ICT services to its partners. 

The concept of linking the western and eastern shores of the Caspian Sea via an optical Internet cable was conceived a quarter-century ago, yet earlier efforts to realize this vision met with failure. The Trans-Asia-Europe (TAE) project, initiated by the EU in 1999, deliberately excluded an underwater component for subjective reasons, resulting in a fiber-optic line that connected the South Caucasus to Central Asia overland through Iran. 

The maritime segment of the fiber-optic communication line was envisioned within Azerbaijan’s 2008 initiative, the Trans-Eurasian Super Information Super Highway (TASIM) project. Despite support from the UN and several EU nations, and significant extensions of backbone internet cables westward by Azerbaijan, the TASIM project was unable to advance the laying of a trans-Caspian optical cable.

Following extensive negotiations within intergovernmental commissions and other bilateral business frameworks, Baku and Astana reached an agreement on the offshore segment of the fiber-optic network. This led to the joint launch of the Trans Caspian Fiber Optic project during a ceremony in Aktau in November 2019, with Prime Ministers Askar Mamin of Kazakhstan and Ali Asadov of Azerbaijan in attendance. 

However, the onset of the pandemic and subsequent global economic crises caused delays in the project's organizational and financial aspects through 2020-2022. Despite these challenges, the project saw expansion during this period. In 2021, memoranda of cooperation were signed with telecommunications operators ElKat LLC and Telegraph 42 Management GmbH LLC, representing Kyrgyzstan and Uzbekistan, respectively. Additionally, in December 2021, Türk Telekom International from Türkiye joined the project as a new partner.

The project gained renewed momentum in early 2023 when AzerTelecom and Kazakhtelecom formalized their collaboration under the TCFO initiative. The two countries' telecom operators committed to invest over $50 million in the project on an equal basis. At this stage, the final High-Level Design (HLD) of the project was adopted, design studies were completed, and a comprehensive roadmap was approved. Additionally, the joint venture Caspinet B.V. was established, with all project participants holding equal shares.

The primary route of the submarine fiber-optic line, approximately 370 kilometers in length, will extend from Aktau in Kazakhstan to Siyazan in Azerbaijan. Additionally, a secondary optical cable will link Kazakhstan’s port of Kuryk with Buzovna on the Absheron Peninsula. According to Zhaslan Madiyev, Kazakh Minister of Digital Development, Innovations and Aerospace Industry, a joint venture has been established among the project participants, and a tender was conducted in June to select a contractor for the cable installation.

The project is now nearing its final stages. As Kazakh President Kassym-Jomart Tokayev highlighted in a recent joint parliamentary session, the fiber-optic communication line across the Caspian Sea is expected to be completed by 2025. 

"This is of paramount importance for our country in terms of developing digital infrastructure that integrates with international corridors and cross-border data flows," President Tokayev emphasized. 
He further stressed the need to continue the active development of telecommunications networks, data centers, and the implementation of global cybersecurity standards, as well as to enhance the skills of specialists.

Once the Trans-Caspian Fiber-Optic Communication Line (FOCL), with an estimated capacity of 400 terabits per second, is installed, the Digital Silk Way project will commence. This initiative is designed to facilitate the transit of network traffic from China and other Asian countries through Kazakhstan, continuing via submarine cable to Azerbaijan, and then through Georgia, Türkiye, and on to EU nations.

The flow of information between Asia and Europe through Azerbaijan and Kazakhstan will unlock new opportunities for digital business development in the Caspian region. The immense data traffic—hundreds of terabits—will expedite the enhancement of data storage and processing infrastructure along the IP corridor. Azerbaijan, a key beneficiary of this project, aims to position itself as the region's digital hub.

Specifically, Baku plans to offer cloud services to both local and international entities through large data centers established as part of the TCFO project. Additionally, the city intends to host cache servers, thereby facilitating content delivery to neighboring regions including Central Asia, Georgia, Iran, Iraq, Afghanistan, and potentially extending to the Middle East in the future.

At the Capacity Middle East Forum in Dubai this February, AzerTelecom CEO Ana Nakashidze highlighted that as global and regional dynamics shift and new technologies reshape the internet’s geography, Middle Eastern countries and neighboring regions are actively exploring new corridors and geographies for connectivity services. The South Caucasus, or Middle Corridor, is becoming increasingly significant as a route for Middle East connectivity services. The advancement of new and large-scale projects in this region will enhance the efficiency and appeal of this route,” Nakashidze stated.

The prospects of the Trans-Caspian IP project are equally promising for the westward transit of network services and information exchange. In this context, AzerTelecom, Azerbaijan’s leading backbone network operator, has been diligently cultivating its partnership with NEQSOL Holding, an international telecommunications conglomerate, over the past several years.

NEQSOL Holding, in collaboration with AzerTelecom, is actively involved in the Digital Silk Way project, which aims to establish and manage a new end-to-end IP network connecting Central Asia to Europe. This network will leverage the existing infrastructure of Sparkle, an Italian company with a backbone extending from Türkiye to Italy and onwards to major European internet hubs. To facilitate this, in April 2022, AzerTelecom signed a memorandum of cooperation with Sparkle, a prominent network service provider.

Apart from that, NEQSOL Holding has acquired Caucasus Online, one of Georgia's largest telecommunications companies, to support this initiative. Caucasus Online operates a fiber-optic cable line across the Black Sea, enabling the transit of internet traffic from Europe to the South Caucasus. Upon completion of the Trans-Caspian Fiber-Optic Cable Line, it will ultimately integrate with the TCFO's infrastructure.